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COA rules on coal bed gas dispute

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In settling a dispute between two Illinois companies regarding who has the legal right to recover coal bed methane gas, the Indiana Court of Appeals made its decision based on public safety and ruled in favor of the company assigned the coal bed gas lease.

The issue in Cimmaron Oil Corp. v. Howard Energy Corp., No. 26A01-0902-CV-67, is whether a 1976 lease that Cimmaron's predecessor obtained for the right to drill for and produce oil and gas includes the exclusive right to drill for and produce coal bed methane gas (CBM).

The Hardimans own the real property in Gibson County at question in the suit. In addition to the 1976 lease Cimmaron has, the Hardimans granted a coal bed gas lease to Howard Energy in 2001. In 2003, Howard Energy filed a complaint for declaratory judgment against Cimmaron and the Hardimans. Howard Energy argues the Cimmaron lease covers only the oil and gas estate and includes only the conventional natural gas emanating from the coal, while its lease holds the right to extract the coal bed methane.

The trial court issued declaratory judgment in favor of Howard Energy, adopting the "eastern rule" that CBM is part of the coal estate, and no interest in CBM passed by reason of the 1976 oil and gas lease. The trial judge also discussed public safety and how giving away control of the CBM from the coal mine operator wouldn't serve public interest.

Because the concept of producing CBM for commercial gain wasn't possible in 1976, it's up to the courts to determine whether that lease somehow permits it.

The Court of Appeals used rulings from other jurisdictions on the presumed or surmised intent in the grant of oil and gas leases pre-dating current technology. Some courts have considered CBM as part of the coal bed estate, as part of the oil and gas estate, or a distinct mineral estate.

The trial court in the instant case followed the "eastern rule" that CBM is a component of coal and CBM production and coal mining are best left in the control of a single entity, wrote Judge L. Mark Bailey. Cimmaron would rather the court adopt the "western rule," which says the holder of a broadly defined gas and oil estate may have rights to CBM, which is a form of gas.

The gas estate owner wasn't granted permission in the lease to invade the coal seam, which would be necessary to produce the CBM. In fact, the CBM would be from virgin coal seams and would require fracturing the seam with high pressure.

"The Hardimans did not explicitly agree to Cimarron's invasion of the coal bed in this manner; it is not reasonable to presume that the intent was to permit invasion of a valuable land asset, the coal bed, should a means of making profits arise in the future," wrote the judge.

The appellate court declined to adopt either rule, but agreed with the trial court that public policy would militate toward considering CBM to be part of the coal bed.

"Public safety would be disserved by pitting the miner who needs to dissipate CBM to prevent explosions against the gas estate owner whose financial resource is being depleted," wrote Judge Bailey. "Nevertheless, it is within the province of the Legislature, to which we defer, to make policy decisions."

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  1. Call it unauthorized law if you must, a regulatory wrong, but it was fraud and theft well beyond that, a seeming crime! "In three specific cases, the hearing officer found that Westerfield did little to no work for her clients but only issued a partial refund or no refund at all." That is theft by deception, folks. "In its decision to suspend Westerfield, the Supreme Court noted that she already had a long disciplinary history dating back to 1996 and had previously been suspended in 2004 and indefinitely suspended in 2005. She was reinstated in 2009 after finally giving the commission a response to the grievance for which she was suspended in 2004." WOW -- was the Indiana Supreme Court complicit in her fraud? Talk about being on notice of a real bad actor .... "Further, the justices noted that during her testimony, Westerfield was “disingenuous and evasive” about her relationship with Tope and attempted to distance herself from him. They also wrote that other aggravating factors existed in Westerfield’s case, such as her lack of remorse." WOW, and yet she only got 18 months on the bench, and if she shows up and cries for them in a year and a half, and pays money to JLAP for group therapy ... back in to ride roughshod over hapless clients (or are they "marks") once again! Aint Hoosier lawyering a great money making adventure!!! Just live for the bucks, even if filthy lucre, and come out a-ok. ME on the other hand??? Lifetime banishment for blowing the whistle on unconstitutional governance. Yes, had I ripped off clients or had ANY disciplinary history for doing that I would have fared better, most likely, as that it would have revealed me motivated by Mammon and not Faith. Check it out if you doubt my reading of this, compare and contrast the above 18 months with my lifetime banishment from court, see appendix for Bar Examiners report which the ISC adopted without substantive review: https://www.scribd.com/doc/299040839/2016Petitionforcert-to-SCOTUS

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